How to keep patients healthy and hospital-free

SINGAPORE - The biggest challenge facing Singapore's health-care system, and most health systems around the world, is coping with ageing patients and the rising prevalence of chronic diseases.

At a ceremony marking the near-completion of the Ng Teng Fong General Hospital, Health Minister Gan Kim Yong revealed that a third of hospital beds were taken up by elderly patients despite the fact that the elderly only constituted a tenth of the total population.

By 2030 - that's just 16 years away - the number of elderly people will triple to over 900,000. The Singapore population is growing older. Ominously it is also sicker. One study projects Singapore's diabetic population will number one million by 2050, a more than threefold increase from today.

It's clear that we are on an unsustainable trajectory. Soldiering on with "more of the same" will fail. Singapore needs to find a better way.

Fortunately, there is a better way. America, with its bloated health system consuming almost a fifth of its GDP, ironically shows that better way.

The crippling growth in health-care spending in the United States has forced innovation. And it is from these "forced innovations" that we can draw important lessons for Singapore.

Take for example CareMore, a Californian group which focuses on the most expensive patients, the elderly with chronic diseases such as heart failure and diabetes. These patients, whom providers traditionally shun, have proven a boon to CareMore. How? By changing the care and the payment model.

Instead of waiting until heart failure patients deteriorate to the point when urgent hospitalisations are needed, CareMore arms patients with weighing scales that wirelessly transmit weight measurements to the care team.

If a patient starts to gain weight, the earliest sign of impending acute heart failure, the care team is alerted and takes urgent action in the patient's home, providing oral medicines and other measures to prevent further deterioration.

Instead of waiting for a small cut in a diabetic to deteriorate into a festering wound needing amputation, CareMore has wound nurses whose primary job is to care for patients with small cuts and make sure they get better. Instead of grumbling about "no-shows" and non-compliant patients, CareMore provides transport to take patients to clinics for appointments.

The net result? A fall in admissions for heart failure of 56 per cent and a decline in diabetic amputations to more than 60 per cent below the average. Importantly, CareMore patients' costs are 18 per cent below the industry average.

How do the economics work? Incentives drive behaviour. System planners need to ensure doctors, hospitals and patients all win in providing the "better way". CareMore eschewed the traditional fee-for-service model, in which hospitals and doctors are paid only when patients use their services.

Instead, it enrolled into Medicare Advantage, which pays it an annual per patient fee, adjusted for risk profile. In such payment models, the health systems that keep patients out of hospitals are the ones that are the most financially successful.

In public health care, more revenues for Singapore's restructured hospitals mean taking more money from the public purse. This is money that could have been spent on better public transport, schools or social services. Hence, we must focus on the cost side of the equation.

There are three crucial lessons for Singapore.

First, a dollar spent today can save a thousand tomorrow through avoided hospitalisations and obviating the need for expensive treatments.

Second, CareMore-type models only work if health systems invest upfront. CareMore incurred losses of about US$12 million (S$15.3 million) in its first four years while it built up the infrastructure needed to provide a different care model. However, it turned the corner in Year 7, reporting a profit of US$24 million.

Third, the CareMore experience highlights an invaluable lesson. Targeted system changes are all that are needed. Former CareMore CEO Alan Hoops told The Atlantic magazine: "We talk as if we need to overhaul the entire health-care system. But that's not quite correct. "The biggest problem - and opportunity - lies with the part of the system that serves our high-risk populations. That's the part of the system that's unsustainable."

To avoid a bottomless pit of health-care spending to the detriment of other essential public services, Singapore needs to change the way health care is provided to the elderly and those with chronic conditions.

Stop paying restructured hospitals and their doctors based on the number of patients, the number of surgical operations and tests. Throw out the current Medisave and MediShield claim amounts, which are based on the number of days in hospital or surgery performed.

Instead, assign restructured hospitals populations of patients with chronic conditions in their respective locations. Then pay them an annual amount from subsidies, Medisave and MediShield based on patients' clinical complexity. Actuarial analyses have been done in many other countries to determine how much health systems should be paid for what types of patients. Singapore can do likewise.

Singapore can reform Medisave, MediShield and government subsidies to promote better health care. New payment schemes could cover tele-health, care by non-physicians and even services like transport.

Whatever works!

The worst thing the government could do is to be overly prescriptive and issue "edicts" as to what can and cannot be paid for. And please don't subject hospitals to painful bureaucratic rules such as "This is 'social' and falls under a different ministry; we can't pay for this".

Then, challenge the doctors and health-care leaders to keep these patients healthy, happy and hospital-free. The dollars saved equate to lower patient bills and more money to improve public service - and bigger bonuses for health-care staff.

Singapore has waited too long to take decisive action. Let's not dither any further. Our children deserve a future better than one blighted by worrying about how to pay for the medical needs of their parents.

The writer, a doctor, is partner and head of the health and life sciences practice at Oliver Wyman, a global consulting firm.

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